Tag Archives: PIZZA



We last updated our previous reports on FAT Brands (FAT) on September 2nd, all of which can be accessed by way of the SEARCH function on our Home Page.  A great deal of progress has been announced in a short six weeks since then. Recall that, including the acquisition of the Twin Peaks sports bar chain, the company, now franchising fifteen brands, has guided to $80M of post-Covid 2022 EBITDA.

We provide below a summary of the group of press releases since September 1st, as well as publicly disclosed remarks relative to the third calendar quarter ending September 30th.

On September 7th, the Company announced a new 200+ unit development deal in the Middle East, including 136 brick and mortar locations plus 70 ghost kitchens. In partnership with Kitopi, the master franchisee of this deal, the expansion over the next five years will cover six FAT concepts, namely Fatburger, Johnny Rockets, Buffalo’s Café, Great American Cookies, Elevation Burger and Yalla Mediterranean. The brick and mortar locations, to be located in the UAE, Saudi Arabia, Bahrain, Qatar and Kuwait, will add to Kitopi’s existing 70 cloud kitchens

On September 15th, the Company priced an offering of $250M of “Series 2021-1 Fixed Rate Asset Back Notes”, which have been used to partially fund the $300M acquisition of Twin Peaks. The weighted average fixed interest rate on the notes is 8.00%. As Andy Wiederhorn, CEO, stated: “This issuance gives us ample time to increase franchised locations of this extremely successful concept…prior to refinancing”. Wiederhorn obviously expects that the interest rate can be renegotiated in a relatively short time, just as he has done with previous securitizations.

On September 27th, the Company announced the opening of the 100th Fatburger, cobranded with Buffalo’s Express, in Arlington, TX. This is the second location for this particular franchisee, whose first location opened in June, 2020. This is the third location in the Dallas/Fort Worth area and the fourth in Texas.

On October 1st, only one month after announcing the planned transaction, the Company closed the deal. As reiterated in the release, the acquisition of Twin Peaks is expected to add $25-30M to FAT Brands’ previously expected post-Covid 2022 EBITDA, bringing the total to about $80M. Twin Peaks is especially notable for its steady unit growth, high average volumes, and impressive recovery (post-Covid) to well above 2019 AUVs and Same Store Sales.


The above releases relate to long term growth objectives. In the meantime, The Company has publicly disclosed a number of data points relating to the third quarter, ending 9/30/21.

In the second quarter reported results, the Investor Presentation showed that the first three weeks of Q3 produced a portfolio AUV of $22,674, up 13% from $20,056 in Q2.

Within the Investor Presentation relating to the Twin Peaks acquisition, it was disclosed that, at Twin Peaks, Period 7 (July) annualized at $4.7M and Periods 5 through 7 annualized at $5.1M, compared to $4.5M in 2019 and $4.4M in 2018. Furthermore, Same Store Sales at Twin Peaks, compared to 2019, turned positive by 0.6% in P2,’21, and have increased every month to a positive 17.8% in P7’21.

The data points provided above, along with previously discussed development pipeline and unit openings, indicate that the third quarter should be encouraging to both equity and debt investors.


CEO, Andrew Wiederhorn, pointed out that the development pipeline, across all brands is about 300 units, to be developed over the next four to five years, expected to grow the portfolio organically at 5-10% annually. The most recently acquired Twin Peaks, now 84 units, is expected to add eighteen restaurants in the next nine months, two thirds of which will be franchised. There are sixteen different franchisees within the Twin Peaks system. The Twin Peaks locations, without tenant allowances, cost $5-6M each, but sale/leaseback transactions generally reduce the out of pocket investment to approximately $2M, on which the franchisee can earn close to $1M annually, or a 50% cash on cash return. Wiederhorn expects that Twin Peaks can grow from the 100 unit level, to be achieved within a year, to double or triple that number over time.


FAT Brands is improving the quality of acquisitions over time, reflecting the growing level of acceptance from the lending community. Since FAT Brands came public in 2017 each  of the major brands that have been added have represented not only an expansion to the portfolio but an upgrade relative to stability and growth. While a number of smaller brands were acquired as well, Hurricane Grill and Wings was followed by Johnny Rockets, followed by Round Table Pizza and, most recently, Twin Peaks. Unit growth potential has been increasingly evident, especially so with Twin Peaks. The near term objective of $80M in EBITDA during post-Covid 2022 has been paid for with $750M of securitized funding at an average of about 7%, or $50M of interest expense. The current portfolio, without considering growth, would therefore be throwing off about $30M of free cash flow in the next year or so, about $2.50 per common share, hopefully more over time. At the same time, the Company has demonstrated an ability to refinance its early securitizations at reduced rates, has indicated an expectation to do the same in the future, which obviously increases the potential free cash flow from the current portfolio. As this strategy comes to fruition, the credibility of FAT common stock could obviously sell at a much higher level.

Roger Lipton



Fast Casual Pizza Segment

MOD Pizza

MOD Pizza, based in Bellevue, Washington was founded in 2008 by Scott and Ally Svenson, who had built two successful food service companies while living in England. The first, Seattle Coffee Company, was sold to Starbucks in 1998, and Scott stayed on as President of Starbucks Europe. The Svensons were also involved with the founding of Carluccio’s Ltd, a chain of Italian restaurants, which went public in the UK in 2005 and grew to 35 locations by 2008.

After returning home to Seattle with their four children, the Svensons foresaw the emergence of “fast casual” pizza, a segment which didn’t previously exist. To our knowledge, MOD was the “first mover” in this regard. The Svensons started MOD pizza with the intention of making a positive social impact in the communities it serves, and a “people first” culture. The MOD experience provides customers the opportunity to create and customize their own pie for one price as they move through the ordering line choosing their ingredients. The pies are rapidly cooked in a 700-degree oven and served super-fast in about 8 minutes (including both preparation and cook time).

Rapid Store Growth accompanied by Substantial Capital Infusions

The first location opened in downtown Seattle in 2008. The second location opened in early 2010 and there were five locations, in a variety of settings by late 2011. With about $7 million of expansion capital provided by the Svensons and other early stage investors over the 2012 and 2013 fiscal years, expansion took the chain to 14 locations by year-end 2013. MOD raised an additional $14 million in March of 2014, and by year-end 2014 there were 31 stores in AZ, CA, CO, OR, TX, and WA, all but one (franchised in CO) were company operated. During calendar 2015, MOD closed an additional funding round of $45 million and grew to a total of 92 locations, 80 company operated and 12 franchised (having signed a small group of experienced multi-unit operators). During calendar 2016, $77 million of additional capital was raised and 100 net new locations were opened, bringing the total to 192. During calendar 2017, $33 million of additional equity was raised, led by previous investors, bringing the total equity raised to about $179 million, and a $40 million credit facility was also established.  Net new openings in 2017 totaled 110 systemwide, building on its prior year base by an impressive 57%. During calendar 2018, 102 net new units were opened (on a base of 302), 77 by the company, 21 by franchisees, and 4 by their UK JV partner. Just announced in May of 2019, MOD raised an additional $160M in equity funding led by Clayton, Dubilier & Rice, a private equity firm, bringing the total equity raised to $339 million.

Within the 404 total units at the end of 2018, the Company operated 302 locations with franchised partners operating 93 and their UK JV partner operating 9. MOD is now represented in 28 states and the U.K., after entering one new state (AL) during 2018. System-wide sales were $398 million in 2018 (a YTY increase of 45%), netting MOD $312 million (a YTY increase of 42%) from company store revenues plus initial franchise fees and ongoing royalties. Domestic system-wide same-store sales were a positive 3.1% in 2018, bringing its two-year same store sales growth to 8.2%. The Company expects to continue its strong store growth in 2019 and beyond, with targeted unit growth of approximately 100 stores per year over the next five years which would approach 1,000 units in total, with the majority of the openings expected to be company operated. (Editor’s Note: 540 total locations reported as of June ’23)

Highly Qualified Management Team

The Company has been dedicated to building a strong corporate operating team, prepared to make the necessary investment in people. In terms of executive talent, Paul Twohig serves as President of MOD and was the former President of Dunkin Donuts US and Canada. John Maguire is the COO and was previously President and Chief Executive Officer of FIC Restaurants Inc. (Friendly’s restaurants) and Johnny Rockets Group, and prior to that COO of Panera Bread. Mark Shambura is the CMO and previously led the marketing team at Chipotle Mexican Grill, and Bob Barton, CFO, was formerly the CFO & VP of Operations of the publicly traded drugstore.com.

The Culture

Scott (CEO) and Ally (Chief Purpose Officer) have built and inspire an operating team focused on making a positive social impact and a people first culture. “Spreading MODness”, the idea of using the business as a platform for positive social change, was demonstrated in 2018 by, among other things, a contribution of over $1.8 million to support local communities and Squad members in need. These contributions, achieved with the help of MOD franchisees, included the delivery of nearly 450,000 meals as part of a continued effort to address childhood hunger in partnership with Generosity Feeds. MOD’s strong connection and social impact with Squad members, consumers, and the community at large continue to be reflected by various awards during 2018. It is noteworthy, and consistent with the corporate culture, that the first loyalty program and mobile app, introduced in 2019, has a points to dollar structure that also gives customers the option to donate their points to charity.


MOD, the fastest growing restaurant chain in the United States for the past four years according to Technomic, Top 500 Restaurant Report 2015-2018, with a dynamic leadership team, supported by deep pocketed financial backers, has built an admirable company to this point, and provides every indication of continued success.

Roger Lipton






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